Stock market today: Dow, S&P 500 close at record highs, Nasdaq surges amid rate cut euphoria

The Dow Jones Industrial Average (^DJI) rose to close above the 42,000 level for the first time ever while the S&P 500 (^GSPC) also soared 1.7% to new highs, closing just over 5,700 a day after the Federal Reserve announced a jumbo rate cut.

Tech stocks led the massive rally as the Nasdaq Composite (^IXIC) gained more than 2.5%.

The "Mag Seven" group gained, with Nvidia (NVDA) jumping nearly 4%, while Tesla (TSLA) rose more than 7%. Apple (AAPL) also increased more than 3%.

Investors shrugged off concerns of any recession after the Federal Reserve cut rates by 50 basis points. The size of the reduction prompted questions on whether policymakers saw a worsening economic scenario that would require such easing conditions.

On Wednesday Fed Chair Jerome Powell said that while unemployment is still at a relatively low rate of 4.2%, the economy is "basically fine."

On Thursday, BMO Capital Markets chief investment strategist Brian Belski raised his year-end S&P 500 target to 6,100 from 5,600, the highest among strategists tracked by Yahoo Finance.

Wall Street has a new high-water mark projection for 2024.

BMO Capital markets chief investment strategist Brian Belski boosted his year-end S&P 500 (^GSPC) target to 6,100 from 5,600 on Thursday. Belski's target is now the highest among strategists tracked by Yahoo Finance.

"Much like our last target increase in May, we continue to be surprised by the strength of market gains and decided yet again that something more than an incremental adjustment was warranted," Belski wrote in a note to clients on Thursday.

Notably, Belski's price target rise didn't come with a change to his earnings estimates, meaning he now sees the index trading at price-to-earnings ratio of 24.4 by year-end. Belski noted this "may seem elevated relative to historical norms."

But he added, "As we have pointed out in several prior reports, we continue to believe a soft landing is the most likely economic scenario which makes the current environment most comparable to the mid-1990s – a period where the index was able to sustain a greater-than-20x multiple for several years."

He sees a continuation of broadening returns in the stock market beyond the "Magnificent Seven" tech stocks as a key driver of the market's success through the end of 2024.

Gold (GC=F) hovered near record highs Thursday, supported by the Fed’s jumbo rate cut and a weakening dollar. Analysts expect the precious metal to go even higher by the end of the year.

Gold futures climbed to trade just above $2,600 after touching fresh records in the prior session immediately after the Federal Reserve announced a 50 basis point rate reduction.

Goldman Sachs analysts recently made a case for higher yellow bullion prices to reach $2,700 by early next year, as capital typically flows into physical gold-backed exchange-traded funds, or ETFs, when the Fed cuts rates.

Read more here.

Shares of Procter & Gamble (PG), PepsiCo (PEP), Campbell Soup Company (CPB), and Hershey's (HSY) have historically benefited in the first 90 days following first soft-landing rate cuts, per analysis from Bank of America.

After taking a closer look at large-cap companies that have "been around for a few cycles" and haven't historically been split or bought, Bank of America analyst Bryan Spillane told Yahoo Finance over the phone that consumer packaged goods companies that tend to have less of an international footprint have historically outperformed their relative peers like Colgate (CL), Coca-Cola (KO) and General Mills (GIS), given the effect rate moves have on currencies.

Both Spillane and Bank of America analyst Peter Galbo agreed that while there could be upside again for these stocks, it's a wait-and-see game to see how the Fed's decision to cut by 50 basis points plays out.

Companies that have floating debt could benefit too, like snack player UTZ (UTZ).

"If you have a lot of leverage in floating rate debt, your cost of debt just went down by 50 basis points," Galbo said. As of its latest quarter, UTZ's net debt totaled $747.5 million.

Tyson Foods (TSN) could see a flow-through effect from the ranchers it works with too, per Galbo. In the latest earnings call, Tyson Food executive Brady Stewart told investors there is a continued focus "on interest rates ... that goes into that economic decision making of the rancher."

It could also mean good news for the grocers, per Advantage Solutions (ADV) executive Andrea Young.

"It's a shared point of view that consumers will feel the benefits of more dollars in their wallet," Young said, adding that those extra dollars will drive trips to grocery stores and purchases of necessities first.

She added that customers will likely put more in their baskets too due to the "increased freedom" that they may feel knowing the "pressure" from higher interest rates is coming down.

The Dow Jones Industrial Average (^DJI) rose more than 600 points to trade above the 42,000 level for the first time as a broader market rally hit session highs on Thursday on the back of a jumbo Fed rate cut.

The Dow rose 1.5%, while the S&P 500 (^GSPC) climbed nearly 2%, also touching a fresh record.

The tech-heavy Nasdaq Composite (^IXIC) led the market rally, rising almost 3%.

Housing stocks are gaining steam along with the broader market after the Federal Reserve’s mega rate cut.

Shares of Toll Brothers, Inc. (TOL), D.R. Horton, Inc. (DHI), and Lennar Corporation (LEN) are up by more than 1%, respectively, during Thursday’s trading.

Mortgage rates have fallen more than a percentage point since May in anticipation of the Fed’s move. The average rate for a 30-year loan still remains above 6% — keeping a lid on sales activity.

However, the Fed has signaled it would lower interest rates two more times this year.

The combination of scarce inventory, escalating prices, and elevated mortgage rates continue to weigh on the appetite for housing. But the new-home market has been a rare bright spot. Homebuilders have been rolling out incentives to spur demand. LEN is on deck to report third quarter earnings after the bell.

Analysts at Bank of America remain upbeat about the outlook for housing. The firm raised its purchase orders for homebuilder stocks by 11% “to reflect greater confidence in higher ROE into 2025 following the significant decline in mortgage rates over the last two months.”

Nvidia (NVDA) soared more than 5% Thursday as technology stocks led Thursday's market surge.

Shares of the AI chip company traded above $119 each, leading the S&P 500 (^GSPC) to touch record highs while the Nasdaq Composite (^IXIC) gained as much as 2.8%.

Other notable movers include Tesla (TSLA), up more than 7%, and Apple (AAPL), up nearly 4%.

Bitcoin (BTC-USD) surged more than 6% Thursday to trade above $63,000 per token amid an overall market rally following the Federal Reserve's jumbo rate cut.

Increasing optimism for a soft landing helped fuel Thursday's rally, lifting cryptocurrencies along with other risk assets.

Bitcoin is up more than 40% year to date, but the cryptocurrency has been volatile following its all-time high above $73,000 in mid-March.

Earlier this month the token was trading below $54,000.

Yahoo Finance's Claire Boston reports:

Average 30-year fixed mortgage rates fell again this week to 6.09%, though the move wasn’t directly tied to the Federal Reserve’s rate cut on Wednesday.

The average rate dropped 0.11 percentage point from a week earlier, according to Freddie Mac data released Thursday, leaving the average at the lowest level since early February 2023.

15-year mortgage rates also fell, to 5.15% from 5.27% a week ago.

Read more here.

Yahoo Finance's David Hollerith reports:

US bank stocks surged Thursday following a jumbo rate cut from the Federal Reserve, a sign of bullishness among investors who now expect an easing of monetary policy will boost Wall Street giants and smaller regional lenders.

Goldman Sachs (GS), Capital One (COF), and Citigroup (C) each rose more than 3% Thursday morning, followed by smaller rises for Wells Fargo (WFC), Bank of America (BAC), JPMorgan Chase (JPM), and Morgan Stanley (MS).

Read more here.

Investors looking for signs of a "soft landing" pointed to the latest initial jobless claims data, which showed jobless claims fell to the lowest level since May.

The Labor Department's report for the week ending Sept. 19 came in at 219,000, versus expectations of 230,000. The prior week's total was revised 1,000 higher to 231,000.

A fall in initial jobless claims signals the labor market may be holding up better than expected.

On Wednesday, the Federal Reserve cut interest rates by 50 basis points, raising questions about whether policymakers were opting for the bigger reduction amid a weakening jobs market.

During Wednesday's press conference Fed Chair Jerome Powell highlighted the unemployment rate has moved up but is still relatively low at 4.2%. Powell described the economy as "basically fine."

Stocks rose Thursday morning as the tech-heavy Nasdaq Composite (^IXIC) led the market gains following the Federal Reserve's rate cut announcement in the prior session.

The Nasdaq gained as much as 2.7% as technology stocks, which typically benefit from a lower interestrate environment, rose.

The Dow (^DJI) climbed more than 1% to hit an all-time intraday high while the S&P 500 (^GSPC) also touched a record in early trading.

Sales of existing homes fell in August as house hunters remained on the sidelines despite mortgage rates hitting their lowest level in over a year.

Existing home sales dropped 2.5% from July to a seasonally adjusted annual rate of 3.86 million, the National Association of Realtors said Thursday, the lowest level since October. Economists polled by Bloomberg expected existing home sales to hit a pace of 3.9 million in August.

On a yearly basis, sales of previously owned homes retreated 4.2% in August. The median home price increased 3.1% from last August to $416,700, the 14th consecutive month of annual price increases.

The combination of scarce inventory, escalating prices, and elevated mortgage rates continues to weigh on sales activity — for now.

“Home sales were disappointing again in August, but the recent development of lower mortgage rates coupled with increasing inventory is a powerful combination that will provide the environment for sales to move higher in future months,” NAR chief economist Lawrence Yun said in a press release.

However, economists at Fannie Mae don’t expect sales activity to turn around this year despite lower mortgage rates.

We “expect 2024 existing home sales to fall to the slowest annual pace since 1995," they said.

Yahoo Finance's Brooke DiPalma reports:

With products from stuffing-flavored chips to ghost pepper chicken noodle soup, companies are ramping up the competition in the grocery aisles.

While retailers like Walmart (WMT) and Target (TGT) are plowing ahead with private labels, Campbell's (CPB) is doubling down on innovation, marketing, and increased distribution to sell its famous brands like Goldfish.

"It all comes down to ... creating the right value, which [is] not dependent solely on a price point," CEO Mark Clouse told Yahoo Finance at Campbell's investor day last week. "It is about how do we add value in ways that are more differentiated and sustainable?"

Read more here.

The Dow (^DJI) and the S&P 500 (^GSPC) touched record highs on Thursday as investors digested the Federal Reserve's announcement during the prior session — a 50 basis point rate cut.

The S&P 500 climbed roughly 1.7%, while the Dow rose more than 1%, both reaching record highs. The tech-heavy Nasdaq Composite (^IXIC) led the gains, up more than 2.3%.

The major averages seesawed during the prior session following the Fed's decision to cut rates.

Gold (CG=F) hovered near all-time highs. The precious metal and other commodities climbed as the dollar declined.